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Connecticut Children's urges removal of hospital-tax exemption to join provider-tax pool
Summary
Connecticut Children's told the Finance, Revenue and Bonding Committee it supports Senate Bill 1550 to remove a statutory exemption and enable the system to participate in the state's hospital tax beginning in fiscal 2027, saying participation could help improve Medicaid cost coverage for its patients.
Jane Baird, senior director of government relations and external affairs at Connecticut Children's, told the Finance, Revenue and Bonding Committee during a public hearing that the health system supports Senate Bill 1550, an act concerning the applicability of the hospital tax to children's general hospitals.
Baird said Connecticut Children's is currently exempt from the provider tax but argued that joining the hospital tax pool would "benefit the state and support our organizational financial sustainability." She noted that more than half of the system's patients rely on Medicaid and that "the percentage of our costs that are covered by Medicaid payments ... is unsustainably low." She told the committee the system seeks to remove its statutory exemption so it could participate beginning in fiscal year 2027.
The testimony said participation would allow the state to leverage additional federal Medicaid revenue and align Connecticut's tax practice with that of most other states. "Not participating in our tax currently makes us an outlier," Baird said, adding that most children's hospitals nationally do participate in their state's hospital tax programs.
Committee members pressed Baird on timing and financial impact. She replied that the multiyear settlement that currently governs the tax "will expire at the end of fiscal year '26," and that the settlement's expiration creates an opportunity to seek inclusion in the tax in fiscal 2027. Baird also told members she could not give a specific dollar estimate of net benefit because the parameters of any future tax — rates and calculation method — have not been finalized.
Lawmakers noted broader uncertainty, including ongoing negotiations between hospitals and the governor and potential federal changes that could alter the hospital-tax framework. Baird acknowledged that federal developments are uncertain and said Connecticut Children's expectation of net benefit is based on national experience and precedent from other children's hospitals.
No formal committee action or vote on SB 1550 was recorded at the hearing; the exchange was testimony and committee questioning. The system's written testimony from Jim Schmerling, president and CEO, was submitted and Baird said she spoke to that testimony.
Looking ahead, Baird said Connecticut Children's wants to stay in touch with the committee as negotiations continue and as federal and state parameters are settled.
Ending: The hearing record shows the committee heard testimony and questions but did not take immediate formal action on SB 1550; committee members requested ongoing contact with Connecticut Children's as tax negotiations and federal proposals evolve.
